As a financial planner, I’m often asked by new clients how to pay for their child’s college education.

I usually respond with real enthusiasm for the client’s foresight in bringing up the subject only to learn the child in question is just finishing their sophomore year of high school and that some really swell campus visits have been planned for this coming summer. In this example, the college funding strategy question is clearly not so much a question but more in the form of a prayer.

Much like retirement planning, the best possible answer to the college funding question is to begin saving as early as possible, ideally in a 529 plan, enlist every living relative in the cause, ferret out every drop of financial aid, apply for every possible college scholarship, and most important make sure that the child is completely invested in the process.

One of my clients was committed to sending their child to a top-rated school, and to their joy he was accepted at an Ivy League university. They delayed retirement, started working overtime, incurred massive debt and made early withdrawals from their retirement plans (which also cost them some taxes). He came home after his first semester and said he didn’t like it. The Dad was floored.

Nothing is more frustrating for me than to find parents sacrificing their all, only to see that child drop out or transfer because he had a change of heart or perhaps had never really bought into the process to begin with.

In 2011, late-night host Conan O’Brien gave the commencement speech at Dartmouth, which included the following passage “Today, you have achieved something special, something only 92 percent of Americans your age will ever know: a college diploma. That’s right, with your college diploma you now have a crushing advantage over 8 percent of the workforce.”

Though off by a few percentage points, the point is not often understood by high school seniors or their parents. Is college simply a rite of passage? A place to mark time honing social skills, attending the odd class, and eventually moving on, degree in hand, to what? Is the degree you’ve earned in a highly technical field commanding numerous job offers and six-figure salaries, or did you receive a degree in women’s studies or sociology, qualifying you for the vast ranks of the unemployed and uninterviewed?

A college education is an investment like any other. If your parents can afford to send you, give them a huge hug, but please don’t waste their money taking four years of introductory classes while learning to mix the perfect margarita. If you lack funds, consider attending a junior college for two years. If you’re motivated, you should have no trouble getting great grades amidst scores of slackers who are there just marking time. Now armed with a great GPA, you are a perfect candidate for any number of schools, and you’ve also just about trimmed your college costs in half. If you can work through school, do so, if for no other reason than you may be more easily employed on campus than post graduation, and that will be one less dollar you owe in student loans.

Years ago, banks were criticized for peddling credit cards on campus and miring students in debt for which they were poorly prepared, based on life experience, to deal with. Guns and butter economic classes are no substitute for real-world experience involving adult signatures, pages of fine print, compound interest and hefty penalties. Is the current student loan debacle any different?

Student loans are inexpensive and easily obtainable, but that interest starts to seriously bite after graduation. More to the point, much like a real estate or tech stock bubble, all that cheap money has the perverse affect of driving up the cost of the very thing it was supposed to pay for. Unlike groceries, college tuition has been rising at easily twice the national inflation rate if not more. The number and amount of student loan debt now rivals the mortgage crisis, with eerie similarities. I suspect the government should properly put little warning stickers on loan documents, like they do on cigarettes.

The Wall Street Journal did an opinion piece earlier this year comparing a Harvard education to working as a California Prison Guard. Sadly, the guard position provided far better benefits and income. This is NOT to say that a college education isn’t a great idea, but that it’s also an investment, with an ever increasing price tag. It’s very important that you get your money’s worth and you go to college for all the right reasons, because if you guess wrong, the misplaced investment of both your time and money may be a mistake that you simply won’t overcome any time soon.

Todd Freeman,CFP.ChFC,AIF is a registered representative with Cambridge Investment Research, Inc., a broker dealer, member FINRA/SIPC. The subject matter and opinions in this article are those of Todd Freeman and are not those of Cambridge. Cambridge and TakePart are not affilated. These are solely the author's opinions and do not represent those of TakePart, LLC or its affiliates.

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